Kabul's unlikely housing bubble seems ready to burst

KABUL, Afghanistan — The war in his homeland was a boom time for Sayed Aman Abed.

The Kabul real estate broker made a small fortune over the past several years as billions of dollars in foreign aid and reconstruction contracts flooded into Afghanistan, creating a robust market for homebuyers and renters in the capital. Abed, a slight, boyish 25-year-old, did well enough to pick up the entire tab for his wedding last year, which cost $27,000, a princely sum in Afghanistan.

But Kabul's unlikely housing bubble is deflating rapidly amid a rash of extravagant insurgent attacks and growing worries among Afghans about what will happen after U.S. combat forces stand down, as expected, by 2014.

For many Afghans, President Barack Obama's announcement in June that he was withdrawing one-third of U.S. forces by next September marked the beginning of the end of the foreign intervention in their country. While that raised security concerns, the prospect that U.S.-led NATO troops, who now number 100,000, would soon depart also sparked worries about the economy, especially among those who've gotten rich off the sudden influx of foreign investment.

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Brokers say that the market value of homes — scooped up like trophies by a cadre of Afghans who hold high-paying jobs with foreign embassies or aid agencies, or scored lucrative transportation or security contracts with coalition forces — has fallen by one-third or more.

"Ever since the Americans announced the drawdown of their forces," Abed said, "I haven't sold a single house."

As a grand assembly of Afghan leaders, known as a loya jirga, meets here to discuss topics including a future strategic partnership with the United States, U.S. officials stress that they'll remain engaged in Afghanistan long after the military drawdown.

Ambassador Ryan C. Crocker said that while U.S. and Afghan officials were still negotiating the terms of such a pact, some American forces could remain past 2014 in a training or advisory role — and that in the meantime, Afghan forces continue to improve.

"Afghanistan is going to look a lot different in 2014 than it looks now," Crocker said. "In what ways, we can't quite predict. But, you know, don't panic."

But that hasn't calmed nerves in Kabul, a city of 4 million people and seemingly as many rumors. Although the crisis of confidence is mostly anecdotal, it underscores how much of the Afghan national budget — more than 90 percent, by most estimates — still comes from foreign assistance more than 10 years into the war.

"There are fears — and I think they are realistic — that the drawdown has economic effects long term," said Thomas Ruttig, co-director of the Afghanistan Analysts Network, an independent research organization in Kabul.

Besides a decline in foreign assistance, Ruttig said, "a lot of jobs will be lost when the drawdown happens and other international actors reduce" their presence, including embassies and relief organizations.

Last year, Abed said, he rented a large house on 11,000 square feet of land in Shash Derak, a well-guarded neighborhood near the presidential palace, to a U.S. aid agency for $22,000 a month for use as a guesthouse. When the lease expired and the agency moved out several months ago, there were no takers. He ended up renting the property for $10,000 a month on a shortened lease to a handful of British expatriates.

A construction firm that Abed works with sold six stories' worth of apartments in a brand-new building last year before it had even built the first floor. This year, he said, the firm is working on a similar, 12-story complex, but it has nine floors still unclaimed.

"A successful businessman, when I told him that I had this or that property in the best sections of Kabul, they used to grab it," Abed said. "Now they are keeping that money in cash in case something happens."

Compounding concerns is a deterioration of security in the capital, which until this year had been mostly quiet even as violence raged elsewhere in the country. Insurgents have carried out more than a dozen major attacks in Kabul since January, including a car bomb attack last month on an armored NATO bus on a busy road in western Kabul, not far from Abed's office.

Mohammad Akram, who deals in property and vehicles from a small showroom in western Kabul, said that the days before the annual autumn Eid holiday, a celebratory period akin to Christmas in the West, previously were among his busiest. But this year he didn't sell a single car before Eid.

Adding to his fears, Afghan security officials came to his office several days ago and warned him not to sell or rent any property in the area as part of security precautions for the loya jirga, which is taking place on a university campus nearby.

"Most of my clients have left the country," Akram said. "They are in Dubai and other places now because of the security situation, and why would they come back? Things are getting worse."

Akram, who looks older than his 38 years, wonders how long he'll be able to keep paying the tuition fees for his three youngest children. He complained that Afghan political leaders, whose business connections have also made them rich off the foreign intervention, have been much more interested in pocketing loot than in preparing for the transition to 2014.

"So much money came to Afghanistan," he said. "If we had an honest government and an honest president, I think our streets would be covered in dollars."

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